Alternative grocers like Amazon/Whole Foods, Walmart, Target, Aldi, warehouse clubs, dollar stores and pharmacies now comprise a majority of U.S. grocery sales. As a result, supermarkets are no longer the primary grocery store for a majority of Americans, according to a Supermarket News article by Scott Moses, managing director and head of grocery, pharmacy and restaurants investment banking at PJ Solomon.
A chart in the article shows that alternative grocery sales have reached $501 billion versus $448 billion for traditional grocers (supermarkets).
As for overall industry sales – which were elevated in 2020 due to the pandemic – Moses doesn’t expect that revenue in 2021 will match last year’s numbers, but says there are various factors that suggest demand will remain relatively high. Those factors include the following:
- In an elevated unemployment environment like we have now, consumers normally eat more at home since it’s less expensive than going to restaurants.
- In the past year millions of Americans have significantly improved their ability to cook at home.
- Nearly one in six independent restaurants closed in 2020, limiting seating capacity, particularly in northern markets.
- A meaningful percentage of people will take many months – if not years – to overcome their fears of sitting inside restaurants.
- A significant percentage of workers will probably work more days at home for the foreseeable future, resulting in many meals eaten at home that historically would have been eaten in restaurants.